Apple Inc. possesses substantial business prospects without the need for flashy moves, as stated by Evercore ISI analyst Amit Daryanani. Leveraging its strong platform and financial position, the company can nurture significant revenue drivers in a “capital-light” manner.
Daryanani maintains his positive outlook on Apple’s stock (AAPL, 2.04%), considering it his top pick, and has revised his price target from $190 to $210. He highlights three multi-billion-dollar opportunities in Apple’s pipeline.
One of these opportunities is anticipated to be unveiled during the keynote address at the WWDC developer conference, where Apple executives will likely announce a mixed-reality headset. This product launch marks Apple’s major introduction in eight years. While the initial pricing might be high, around $3,000, Daryanani suggests that mass adoption might not be immediate or even in the near future. He expects the ramp-up to be slower compared to the Apple Watch due to the high price point.
Daryanani estimates that Apple could sell over 10 million headset units in the first five years, making it the slowest ramp for a new Apple product in the 21st century. Nonetheless, the financial opportunity remains significant, with projected annual revenue reaching $10 billion by the fifth year of sales.
Additional multi-billion-dollar opportunities lie in Apple’s advertising business, which Daryanani believes can grow from its current $4 billion revenue to over $30 billion in five years. With the global advertising market exceeding $1 trillion, even a single-digit market share would be substantial. Daryanani suggests Apple can tap into new potential by expanding advertising within its maps and television products.
Furthermore, Apple can capitalize on its increasing involvement in the payments sector. Daryanani asserts that Apple’s large user base provides significant negotiating power in the payments space. Apple Pay serves as an example of this, as payment companies initially resisted sharing interchange fees but ultimately had to comply due to user demand. Daryanani estimates that greater adoption of Apple Pay could drive the company’s payments business to generate approximately $14 billion in annual revenue by 2027.
In addition to these emerging opportunities, there is also the potential for Apple to further expand its market share, particularly in emerging markets like India. Daryanani notes that gaining market share in India alone could boost revenue by $20 billion. Overall, Apple’s iPhone business generated $205 billion in sales during the last fiscal year, providing ample room for growth.
